Quick Lube Price Increases

[bantar]

We've been encouraging each other to raise prices to meet our business profit needs on the Labor Rate thread and I mentioned oil change pricing being more commoditized.   I was really afraid of changing my basic oil pricing.   Well, we made a big change yesterday and I'm nervously watching the reactions.

In my mind, when gas hits $3/gallon is the time to raise prices, which in Texas is a pretty recent event.   It happened, but there was little overall noise, so I sheepishly waited.   Thursday night I go to bed, thinking nothing of this.  Friday I wake up, watching the news and it dawned on me that the news cycle was all about inflation.  It was the RIGHT TIME to act!!!   (In truth, it likely was the wrong time because the right time was long ago, but I digress).    So, I did an area pricing survey and found that I was priced in the bottom 40% of the field.  I was actually late to act.   Starting on Saturday, we've raised our prices about 25%.    I know some of the other shops are also planning price increases, but we are now priced in the top 20% instead of the bottom 40%.

We've not had anyone walk out due to pricing.   We've had but 1 grumble so far.   We will get some pushback eventually, but I was really surprised that it was not immediate.  Shame on me for not acting sooner.

Now, back in August 2021, we did raise prices on our European Oils and received almost zero pushback.   But, this was expected.  They are thrilled to get such a bargain compared to the dealer.    In some instances, I'm actually higher than the dealer.  In most cases we are maybe 25-40% less.

I remain nervous because we might see silent pushback... that is, they pay this time, but seek someone else for next time.   I do believe that the rest of the market will be moving soon, so the search for yesterday's prices might be futile.

[Joe Marconi]

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[bantar]

Well, I'll have to say that this has gone both good and bad.   I'm going to explain what I expected and what I'm seeing.    I'm partially surprised... in a good way.

With this being an often used service, it's possible that folks remembered what they paid the last time.    Right now, for each customer, we are quoting the price for the service before starting.  We solicit a positive affirmation.    We don't quote the price for repeats that are not experiencing a price change as we've always done.    We are not explicitly calling out the price increase.    If a customer comments, then we have that conversation.    Our repeat customers are saying ok.   I don't think anyone has walked over it.  They may or may not return for the next visit, so it's TBD.

I really expected an Indian Revolt.  We have a lot of Indian customers who appear to be price sensitive, but most are not reacting.   As a group, they tend to negotiate the most, but I've learned that they were often cheated in their home country, so they do value honesty.  But the old ways of haggling seem to be hard to shake.

Many customers, both old and new, simply say ok.   No reaction to the pricing at all.   I expected more reactions from new customers, but this has not materialized.   Having said this, we are seeing a increase in the number of "no thanks" abandonments.   1-2 weekly has moved up to 1-3.  Much smaller than I feared. 

But, we get lots of phone calls asking about price before arriving and with these, I believe that we are taking a hit, but it's a gut feeling only.   Are they price shopping, or planning their budget for the month?  You can't tell.   We know that some do come after this call.  Until the local market pricing stabilizing, I'll be losing all price shoppers, which is ok.   We weren't the lowest to begin with and still aren't.

I send out post service surveys and did get one back from a fellow that said:  "You don't need to make 80 dollars on a 15 minute change."  (his analysis on my costs)  He's a VW owner and my VW guys don't always realize that they are driving Euro vehicles.   He did not do the service.   In the same note, he said:  "I want to come here for things because everyone is friendly and knowledgeable but I can't pay $$$ ..."    There's the catch... what kind of service do I want?

In the end, it was the right thing to do. Timing was good, but my have been ok sooner.  At least, we have a scapegoat in the news.  May need to do it again sooner than I expected with this inflation.